Despite the constant climate change rhetoric and opposition to fossil fuels, one of the cleanest burning fuels is natural gas, including liquefied natural gas (LNG). In fact, LNG has proven to be better than any other fossil fuel for the environment, as it generates 30% less carbon dioxide than fuel oil and 45% less than coal. While LNG still does have an environmental footprint, it contributes to far fewer carbon emissions.
With many across Wall Street expecting a cold winter, the demand for natural gas, which has already driven prices sky-high, could continue to stay elevated. We screened our 24/7 Wall St. database and found five large-cap stocks that are ideal for growth stock investors looking to capitalize on the solid pricing and demand environment.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Baker Hughes
This stock makes sense for investors looking for energy exposure via services. Baker Hughes Co. (NYSE: BKR | BKR Price Prediction) is an international industrial service company and one of the world’s largest oilfield services and equipment companies. It provides the oil and gas industry with products and services for oil drilling, formation evaluation, completion, production and reservoir consulting.
The company prides itself on being a self-described energy technology company that provides solutions to energy and industrial customers worldwide. Built on a century of experience and with operations in over 120 countries, the firm’s innovative technologies and services are taking energy forward.
Shareholders receive a 2.83% dividend. BofA Securities has a Buy rating on Baker Hughes stock, and its $33 price target compares with a $28.97 consensus target and Monday’s closing price of $25.45 a share.
Cheniere Energy
This top LNG play has made a nice move off the October 2020 lows. Cheniere Energy Inc. (NYSEAMERICAN: LNG) is an energy company primarily engaged in LNG-related businesses. The company operates through two segments.
Cheniere’s LNG terminal segment consists of the Sabine Pass and Corpus Christi LNG terminals. Its LNG and natural gas marketing segment consists of LNG and natural gas marketing activities by Cheniere Marketing.
Cheniere Marketing is developing a portfolio of long- and medium-term SPAs with professional staff based in the United States, the United Kingdom, Singapore, and Chile. The company conducts its business through its subsidiaries, including the development, construction, and operation of its LNG terminal business and the development and operation of its LNG and natural gas marketing business.
Shareholders receive a 1.30% dividend. Evercore ISI’s Outperform rating on Cheniere Energy stock comes with a $130 price target. The consensus target is $107.73, and shares closed on Monday at $101.63.
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EQT
This company is expected to have a stunning percentage of its production come in as natural gas. EQT Corp. (NYSE: EQT) operates as a natural gas production company in the United States. It also produces natural gas liquids (NGLs) and crude oil. As of December 31, 2020, it had 19.8 trillion cubic feet of proved natural gas, NGLs and crude oil reserves across approximately 1.8 million gross acres.
With more than 125 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology. This technology is designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint.
The $34 Truist Securities price target on Buy-rated EQT stock compares with the $29.00 consensus target. The stock dropped almost 5% on Monday to close at $19.90 a share.
Ovintiv
This off-the-radar name has some undeniable positive prospects. Ovintiv Inc. (NYSE: OVV) engages in the exploration, development, production and marketing of natural gas, oil, and NGLs in the United States and Canada.
The company’s principal assets are in the Permian in west Texas, Anadarko in west-central Oklahoma and Montney in northeast British Columbia and northwest Alberta. Its other upstream assets are in the Eagle Ford in south Texas, Bakken in North Dakota, Uinta in central Utah, Duvernay in west central Alberta, Horn River in northeast British Columbia, and Wheatland in southern Alberta. The company was formerly known as Encana.
The dividend yield is 1.47%. Morgan Stanley has an Overweight rating with a $54 price target. The much lower $40.45 consensus target on Ovintiv stock also compares with Monday’s $38.05 closing print.
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Targa Resources
This top energy midstream company is on the Goldman Sachs Conviction List of top stock picks. Targa Resources Corp (NYSE: TRGP) is a leading provider of midstream services and one of the largest independent midstream energy companies in North America. Targa owns, operates, acquires and develops a diversified portfolio of complementary midstream energy assets.
The company is primarily engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling NGLs and related products, including services to liquefied petroleum gas exporters; gathering, storing and terminaling crude oil; storing, terminaling and selling refined petroleum products.
Targa Resources has one of the premier asset positions in the Permian Basin. With solid management, a strong balance sheet and attractive exposure to some of the most attractive U.S. energy basins, it remains a top pick across Wall Street.
Investors in Targa Resources stock receive just a 0.75% dividend. BofA Securities set a $62 target price on the Buy-rated stock. The consensus target is $54.55, and shares closed at $53.02 on Monday.
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These five top energy picks are perhaps off the radar for some investors but focused on natural gas, and sales offer outstanding growth potential and reasonable entry points compared to some other companies in the sector. Plus, with the natural gas prices soaring, many can hedge forward production at levels not seen in years.
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